South Florida’s already-high new home prices could get boosted by the trade war — again. And this time, the price of the furniture and TVs used to furnish them could rise as well.
Under new tariffs proposed last week, finishes like stone counter tops, tiles and light fixtures from China would become more expensive. That’s on top of price increases on imported steel and lumber caused by tariffs imposed earlier this year on goods from Mexico and Canada.
Furniture, apple juice and some electronics are also on the new list. That has retailers forecasting higher prices, lower demand and slower growth. The proposed tax on more than a third of all Chinese imports is set to go into effect in September following a comment period.
“These tariffs have the potential to negatively impact almost every business in Florida, including our 270,000 retail establishments,” R. Scott Shalley, president and CEO of the Florida Retailers Federation, said in an email. “Our member retailers will see declines in sales resulting in lost jobs that hurt Florida families.”
Last week, the Trump Administration proposed a 10 percent duty on $200 billion worth of Chinese goods coming into the United States. This round of tariffs, the most expansive yet, is part of an ongoing trade war. Over the past year, tariffs have been imposed on goods including lumber, steel and aluminum from China and other nations. As part of the shifting international trade scene, Japan and Europe Tuesday announced a trade deal that would eliminate most tariffs on goods sold between the two.
“Unlike the last tariffs on steel, the direct impact on the consumer will be felt if the next round of tariffs come through,” said Ken Krasnow, South Florida executive managing director at analyst firm Colliers International.
In the short term, he said, that means lower demand as prices rise for goods such as televisions and microwaves. Companies may reconsider opening new locations and expanding their stores. But further down the road, Krasnow said, retailers will bounce back.
Despite recent closures of Toys R Us and other big-box retailers, he said, demand is strong in South Florida, where the retail real estate vacancy rate is under 5 percent. Retailers will find ways to lower prices by retooling the supply chain away from Chinese imports.
“Yes, there are challenges in the retail market in South Florida,” Krasnow said. “But the core market is doing really well.”
City Furniture CEO Keith Koenig, projects a 3 to 5 percent increase in some prices. The Tamarac-based furniture giant, with revenues around $364 million last year, contracts with a factory in China. that produces 25 percent of City Furniture’s inventory.
Outdoor patio furniture, upholstered fabric and leather furniture and some memory foam mattresses would become more expensive, he said.
Still, Koenig doubts the tariffs will actually kick in two months from now, figuring the proposal is a negotiating tactic. Furniture prices have been relatively stable, creating flexibility in pricing.
“If there were a modest increase in retail prices, would it change things a lot?” he said. “No, I don’t think so.”
Tariffs or no, the trade war is unlikely to bring more furniture manufacturing jobs to the U.S. and South Florida, he said — even though his company does work with a factory in Mississippi.
“There’s too much manual labor involved,” Koenig said. “These aren’t the jobs we want our children to have.”
Miami imported $6.2 billion in Chinese products last year — the third most behind Brazil and Colombia — and the proposed tariffs will put a 10 percent tax on $2.25 billion of those products, according to an analysis of Census Bureau data.
Suitcases, marble and cameras are on the list. Cellphones, by far the largest import into Miami, are not on the list.
Additional taxes on nearly $150 million in hardware and flooring would be a double-whammy for South Florida’s construction industry. Included are home furnishings such as granite counter tops and tile.
Peggy Marker, president of Marker Construction Group, which builds commercial properties and high-end custom homes, said material prices have already risen 5 percent due to tariffs on steel and lumber levied in June. Subcontractors aren’t holding prices for more than 10 days, and her commercial clients are scrambling to lock in pricing before even securing financing.
And prices are far from leveling. Her contractors are predicting another 5 percent increase in rebar and steel.
“This is just the start,” Marker said. “It’s not just your material goods, you’re going jacked up on your finishes as well, which gets passed down to the consumer.”
Now, she’s looking at higher prices on finishes, which she said account for 15 percent to 40 percent of a development’s budget. Nearly all of her furniture comes from China, and Marker is racing to get in the orders for a hotel she’s building in Fort Lauderdale.
“Imagine the higher cost multiplied across 374 rooms,” she said.